Question

My teacher and his worksheets from online say that the formula for Simple Interest is [I = PRT/100] but wherever I look online, I see its just [PxRxT]...
Which one is it? -_-

Answer 1

Look at the attached example. R for rate is expressed as a percentage.
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http://www.mathsisfun.com/money/interest.html

Answer 2

It appears that your teacher's simple interest formula is the same.
[I = PRT/100] with the rate given not as a percentage.

Formulas don't mean much unless the variables in the formulas are defined.

@Drewkatski Do you have an interest problem you would like to work? If so, post it. Thanks.

Answer 3

Ok, so its the same :) I understand how to do Simple Interest, I just wondered if my teacher was giving me the right thing or not

Answer 4

But why exactly am I dividing the PRT answer by 100?

Answer 5

Your teacher gives the problem:

Jan borrowed $43,000 for 4 years at a 5% interest rate. How much interest is that?

Teacher's Formula

I = (P*R*T) / 100 where P = $3,000, R = 5, and T = 4 years

Not that R is 5 in the formula.

Yet, the interest rate is 5%. Percent means hundreths. So 5% = 5/100.

Rather than have you make that calculation, the teacher put the 100 in the denominator so that the 5 in the formula is really 5/100 = 5%.

Answer 6

In the Internet problem I posted, the person who did that problem used the formula I = PRT where P is principal, R = interest percentage expressed as a decimal, and T is the time in years of the loan.

In short, the two formulas are the same. My suggestion is that you learn one and stick with it.

Answer 7

Ok, I will go with R = PRT, it'll save time :D Thanks

Answer 8

Okay, but remember the variables: I for simple interest amount, P for principal, R for interest rate expressed as a decimal, and T for time in years. @Drewkatski

Answer 9

yep